The key benchmark indices may remain volatile on mixed Asia and ahead of holiday on Tuesday, 13 October 2009. The stock market remains shut on 13 October 2009 on account of the assembly elections. The investors will keenly watch industrial output data for the month of August 2009 due today. The index of industrial production stood at 6.8% in July 2009.
HDFC, Axis Bank, Astra Microwave, DCB, Exide Industries, Geojit BNP Paribas, Infomedia 18, Praj Industries, Sintex Industries, TTK Prestige will announce their Q2 September 2009 result today.
Reliance Industries will be in action after Anil Dhirubali Ambaini group Chairman Anil Ambani called on Sunday for a renewed effort to end a bitter feud with his brother triggered by the carve-up of up a vast family business stretching from energy to telecommunications and financial services. He said in a statement he believed all disagreements can be sorted out in a constructive, cordial and conciliatory manner, and called for a generous heart, a willing mind and accommodating spirit to resolve issues.
Their latest dispute is over a deal for Mukesh Ambani's Reliance Industries to sell gas to Anil Ambani's Reliance Natural Resources at below-market rates as agreed in a 2005 family settlement to divide the business following their father's death in 2002.
Investors will also watch response to Indiabulls Power's 39.07 crore shares initial public offering which opens for subscription today. Indiabulls Power, a unit of Mumbai-based developer Indiabulls Real Estate, is developing five thermal power plants in western and central India, with total capacity of 6,600 megawatts, and will use the issue proceeds to fund two projects. Issue closes on Thursday, 15 October 2009.
Stock and sector-specific activity may dominate trade in the coming days based on expectations on Q2 September 2009 results. Auto firms are seen reporting strong Q2 results on strong volume growth and on lower input costs. Cement firms too are seen reporting good Q2 numbers on the back of volume growth, higher realisation and decline in costs like imported coal. Metal firms are seen reporting fall in net profit due to a sharp fall in metal prices on year-on-year basis.
Fall in volumes in the commercial property segment and lower realisations in both commercial and residential property segments, will pull earnings of realty firms lower. A sharp surge in equity markets may help treasury gains for some banks.
Strong growth in new subscriber additions will aid topline growth of telecom firms. But falling average revenue per user (ARPU) and revenue per minute due to intense competition will cap bottom line growth.
Meanwhile, Prime Minister Manmohan Singh said on Sunday that the worst is over for the Indian economy, and measures to control the sharp rise in food prices are taking effect,. Singh, also said he was confident the harvest will be normal, despite the weakest monsoon since 1972 that has ravaged rice and sugarcane fields. Singh had said earlier the Indian economy is likely to grow at 6.3 to 6.5 % in the fiscal year to March 2010, or a seven-year low. Economic stimulus measures were likely to continue as Asia's third-largest economy was not operating at full capacity, PM said.
Inflation based on the wholesale price index (WPI) rose 0.7% in the year through 26 September 2009, lower than a rise of 0.83% in the year through 19 September 2009, data released by the government on Thursday showed. Food article index in the WPI was up sharply at 15.45%. Meanwhile, the government revised upwards inflation for the year through 1 August 2009 to a decline of 0.83% from an estimated fall of 1.74%.
Last week, the Reserve Bank of India (RBI) Governer, D Subbarao said while there was broad agreement that the central bank needs to wind back some of its easy policy stance, there were risks if the move was mistimed. An early exit from the accommodative monetary stance on inflation concerns runs the risk of derailing the fragile growth, while a delayed exit may engender inflation expectations, he said. The central bank has pumped huge liquidity in the system and drastically cut policy rates in the aftermath of the global financial crisis last year.
Asian stocks were trading mixed today. The key benchmark indices in Hong Kong, South Korea and Taiwan fell by between 0.09% to 0.88%. The key benchmark indices in China, and Singapore rose by between 0.18% to 0.58%.
In US markets, the Dow Jones hit a fresh 2009 high on Friday, 9 September 2009. Chevron said it expected its third-quarter earnings to be significantly higher than the second quarter lifted sentiment. The Dow Jones Industrial Average gained 78.07 points, or 0.8%, to 9,864.94. The S&P 500 Index added 6.01 points, or 0.6%, to 1,071.49, while the Nasdaq Composite index rose 15.35 points, or 0.7%, to 2,139.28.
In important data watch, the trade balance unexpectedly dropped to $ 30.71 billion in August 2009, economists had expected it to widen to 33 billion dollars.
Back home, the key benchmark indices lost ground on Friday as lower European stocks and fall in US index futures triggered profit taking. Intraday volatility was high. Good Q2 September 2009 results from Infosys failed to lift sentiment. The BSE 30-share Sensex fell 200.88 points or 1.19% to 16,642.66 on that day.
As per provisional figures on NSE, foreign funds sold shares worth Rs 44.27 crore and domestic funds bought shares worth Rs 86.72 crore on Friday.
A section of the market is, however, concerned that a glut in share sales may suck liquidity from the secondary market. As per reports, 30 companies have filed their draft red herring prospectuses in September 2009 with market regulator Securities & Exchange Board of India (Sebi) for raising funds through initial public offering.
The corporate sector has raised large sums of money through equity and equity related instruments in the past six months or so to either to retire high cost debt or to fund expansion. The supply of paper by Indian firms appear limitless, raising concerns that additional share sales will suck liquidity from the secondary market.
As per one report, companies plan to raise over Rs 50,000 crore through initial public offers (IPOs), follow-up public offers, divestment of stake sale in the second half of the current financial year. Reliance Infratel also announced on 22 September 2009, its intention to raise Rs 5,000 crore from the primary market. A number of companies are also in the fray to raise funds by way of qualified institutional placement (QIP), reports suggest.
Divestment of state-run firms by the government may also increase the supply of paper in the market. As per recent reports, the government is planning to announce a blueprint for selling its stake in state-owned firms in the first week of October 2009. The policy is expected to suggest how the government will eventually bring down its stake in public sector companies to 75% over a period of time.
Some caution may prevail on the bourses ahead of assembly polls in three states viz. Maharashtra, Haryana and Arunachal Pradesh on 13 October 2009. The counting of votes will take place on 22 October 2009.
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